ORDER

R.V. Easwar, Vice President. - These appeals by the department relate to the assessment years 2002-03 and 2003-04. The following question has been referred to the Special Bench for decision :

"Where the expenses incurred in foreign currency treated as attributable to the delivery of computer software outside India is excluded from export turnover, whether the same should also be excluded from total turnover for the purpose of computation of deduction under section 10B of the Income-tax Act, 1961 ?"

A number of other assessees applied for intervening in the above matter. Their request was accepted and they were also heard.

2. We may briefly notice the facts of the assessee's case. The assessee is M/s. Sak Infotek Ltd., (now known as Sak Soft Ltd.,) of Chennai. It is a company engaged in the export of computer software. For the assessment year 2002-03 it filed a return of income admitting income of Rs. 34,18,214 after claiming exemption of Rs. 3,07,77,341 under section 10B of the Income-tax Act. The return was first accepted under section 143(1) but was later taken up for scrutiny under section 143(2). In the course of the assessment proceedings, the Assessing Officer noticed that while claiming deduction under section 10B, the assessee has declared export turnover of Rs. 8,33,64,528. The details furnished by the assessee showed that it had incurred the following expenditure in foreign currency :

According to the Assessing Officer, the aforesaid expenditure was to be excluded from the export turnover in terms of clause (iii) of Explanation 2 below the section and accordingly he excluded the same from the export turnover and arrived at the export turnover at Rs. 8,04,57,472 (i.e., Rs. 8,33,64,528 minus 29,07,056). He further reduced the export turnover by Rs. 8,25,125 but that was for the reason that the inward remittances were not proved. He thus arrived at the export turnover at Rs. 7,96,32,347. The Assessing Officer thereafter computed the deduction under section 10B by applying the following formula prescribed by section 10B(4) :

The profits of the business as computed by him came to Rs. 3,39,85,047. The figure of export turnover, as already seen, was taken at Rs. 7,96,32,347. The figure of total turnover was taken at Rs. 9,26,23,216. The deduction was accordingly calculated at Rs. 2,92,18,474.

3. The question in the present appeal is whether the Assessing Officer should have taken the figure of total turnover which is the denominator in the above formula at Rs. 8,97,16,160 i.e., after deducting the expenditure of Rs. 29,07,056 from the total turnover of Rs. 9,26,23,216. The assessee's contention is that there should be parity between the figures of export turnover and total turnover, and the figure of Rs. 29,07,056 should be excluded from both the export turnover and the total turnover, which are the numerator and the denominator respectively in the formula. In respect of the assessment year 2003-04 also the contention of the assessee is the same, though the figures are different.

4. Section 10B makes special provisions in respect of newly established 100 per cent export oriented undertakings. Sub-section (1) provides that a deduction of such profits and gains as are derived by a 100 per cent export oriented undertaking from the export of articles or things or computer software for a period of ten years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce articles or things or computer software, as the case may be, shall be allowed from the total income of the assessee. Sub-section (4) provides that for the purposes of sub-section (1), the profits derived from export of articles or things or computer software shall be the amount which bears to the profits of the business of the undertaking, the same proportion as the export turnover in respect of such articles or things or computer software bears to the total turnover of the business carried on by the undertaking. The Explanation 2 below the section defines certain expressions occurring in the section. Clause (iii) defines what export turnover means, for the purpose of the section. It means the consideration in respect of the export by the undertaking of articles or things or computer software received or brought into India in convertible foreign exchange, but does not include (a) freight, telecommunication charges or insurance attributable to the delivery of the articles or things or computer software outside India or (b) expenses if any, incurred in foreign exchange in providing the technical services outside India. The Explanation does not define what total turnover means in the formula prescribed by sub-section (4).

5. The contention of the assessee is that if the expenses incurred in foreign exchange in providing the technical services outside India, amounting to Rs. 29,07,056 are to be statutorily excluded from the export turnover, which is the numerator in the formula, unless the said expenses are also excluded from the figures of total turnover, which is the denominator in the formula, the results are bound to be skewed. It is contended that the ingredients of the numerator and the denominator should be the same so that parity is maintained. This is the crux of the contentions raised by the assessee before us.

6. The interveners have also adopted the same line of argument. Some of them have adopted a broader base in the sense that their arguments were not limited to the exclusion of expenses incurred in foreign exchange in providing technical services outside India, but also extended to the exclusion of freight, telecommunication charges or insurance attributable to the delivery of the articles or things or computer software outside India. Since these expenses are also to be statutorily excluded from the export turnover, according to them they should also be excluded from the total turnover. The logic behind the exclusion of both types of expenditure mentioned in the definition of export turnover is, however, the same and both sides have addressed us on the question in its broader aspect also. It may be clarified that the case of Sak Soft Ltd., on facts relates to the exclusion of certain expenses incurred in foreign exchange in providing technical services outside India. The question referred to the Special Bench however, refers to expenses incurred in foreign currency treated as attributable to the delivery of computer software outside India. It was common ground before us that so far as freight, telecommunication charges or insurance is concerned, the expenses may be incurred even in Indian currency and that the requirement that the expenses should be incurred in foreign exchange was limited only to the expenses in providing the technical services outside India. The definition of the term 'export turnover' also supports this interpretation. Therefore, even though the question placed before the Special Bench seems to assume that expenses attributable to the delivery of computer software outside India was incurred in foreign currency, statutorily there seems to be no requirement that such expenses should only be incurred in foreign currency. Subject to this clarification or modification, which really does not make any fundamental change to the substance of the question posed before the Special Bench for decision, we proceed to decide the issue which really arises in the cases before us, namely, whether any expenses on freight, telecommunication charges, or insurance attributable to the delivery of the articles or things or computer software outside India or any expenses incurred in foreign exchange in providing the technical services outside India, which are required to be excluded from the export turnover as defined in Explanation 2(iii) below section 10B, ought also to be excluded from the figure of total turnover while applying the formula prescribed by sub-section (4) of section 10B.

Summary of the Arguments of the assessee and the Interveners :

7. The argument on behalf of Sak Soft Ltd., is principally that parity should be maintained between the numerator and the denominator in the formula i.e., between the export turnover and the total turnover respectively. Strong reliance is placed on the judgment of the Supreme Court in Commissioner Of Income Tax, Coimbatore v. Lakshmi Machine Works [2007] 290 ITR 667 (hereinafter referred to as 'LMW' for short). It is submitted that in this judgment the Supreme Court recognized the need for parity between export turnover and total turnover for the purpose of section 80HHC and held that where excise duty and sales-tax are to be excluded from the export turnover, they are also to be excluded from the total turnover. Reference was also made to the judgment of the Delhi High Court in Commissioner Of Income Tax… v. Lotus Trans Travels Pvt. Ltd.…. [2007] 290 ITR 1 , in which the provisions of section 80HHD were interpreted. It was pointed out that this section also did not contain a definition of 'total turnover' but nevertheless it was held that since the foreign exchange receipts, which was the numerator in the formula excluded foreign exchange received on behalf of other hotels, the same should also be excluded from the total receipts, which is the denominator in the formula. It was emphasized before us on behalf of the assessee that section 80HHD, just as section 10B which is before us, did not contain a definition of 'total receipts' which is the denominator in the formula but still it was held on general principles that parity between the numerator and the denominator should be maintained. Besides these two judgments, the following judgments were also cited on behalf of the assessee :

(i) CIT v. Sudarshan Chemicals Industries Ltd. [2000] 245 ITR 769 (Bom.);
(ii) CIT v. Chloride India Ltd. [2002] 256 ITR 625 (Cal.);
(iii) CIT v. Bharat Earth Movers Ltd. [2004] 268 ITR 232 (Kar.);
(iv) K.R.M Marine Exports Ltd. v. Assistant Commissioner Of Income-Tax [2007] 288 ITR 151 (Mad.);
(v) IFB Agro Industries Ltd. v. Dy. CIT [2002] 83 ITD 96 (Cal.) (SB);
(vi) Tata Elxsi Ltd. v. Asstt. CIT [2008] 115 TTJ 423 (Bang.) .

It was next argued on behalf of the assessee that the meaning of total turnover in section 80HHC, as judicially interpreted should be incorporated in section 10B in order to effectuate the object of the section. Our attention was drawn to Circular No. 528, dated 16-12-1988, issued by the CBDT which stated in para 18.2 that section 10B was inserted with a view to providing further incentive for earning foreign exchange and to secure that the income of a hundred per cent export oriented undertaking shall be exempt from tax for a period of five consecutive assessment years. Reliance was also placed on two orders of the Chennai Bench of the Tribunal, one in California Software Co. Ltd. v. Asstt. CIT [2008] 118 TTJ 842 (Chennai) and another in Dy. CIT v. S.R.A. Systems Ltd. in [IT Appeal No. 3348 (Mad.) of 2004, dated 15-6-2007] (copy filed at pages 108 to 113 of the paper book). Our attention was drawn to para 23 of the order in the case of California Software Co. Ltd. (supra) and it was contended that though the ultimate decision was against the assessee in that case, the reasoning adopted by the Bench helps the present assessee. As regards the order in the case of S.R.A. Systems Ltd. (supra) it was submitted that the order was in conformity with the circular cited above.

8. The next argument of Sak Soft Ltd., is based on section 80HHE. This section allows deduction in respect of profits from export of computer software etc., and was inserted by the Finance (No. 2) Act, 1991, with effect from 1-4-1991. There is an Explanation below the section which defines various terms used in the section. Under sub-section (3), the profits derived from the business eligible for the deduction shall be the amount which bears to the profits of the business, the same proportion as the export turnover bears to the total turnover of the business carried on by the assessee. Clause (c) of the Explanation defines 'export turnover' and it is almost identical with the definition of 'export turnover' in clause (iii ) of Explanation 2 below section 10B. Clause (e) of the Explanation below section 80HHE defines 'total turnover' by excluding, inter alia the freight, telecommunication charges or insurance attributable to the delivery of the computer software outside India and expenses if any incurred in foreign exchange in providing the technical services outside India. The argument is that since both the sections deal with profits from the export of computer software and the definition of 'export turnover' in both is the same, and the total turnover having been defined in section 80HHE to exclude the two items of receipts which are excluded by the definition of the export turnover in both the sections, it stands to reason that the same interpretation should be adopted in both the sections insofar as the total turnover is concerned and accordingly even in section 10B, the two items mentioned in the definition of 'export turnover' should be excluded from the total turnover while applying the formula. It is submitted, based on the judgment of the Supreme Court in Raghubans Narain Singh v. Uttar Pradesh Government AIR 1967 SC 465 that it is a well settled rule of construction that where the Legislature uses the same expression in the same statute at two places or more, the same interpretation should be given to that expression unless the context otherwise requires.

9. A further argument was advanced on behalf of Sak Soft Ltd., based on guidance note issued by the Institute of Chartered Accountants of India relating to tax audit under section 44AB of the Act. In the guidance note, the ICAI has referred to its guide to company audit where the term 'total turnover' has been defined as the aggregate amount for which sales are effected by the company after deducting there from goods returned, price adjustments, trade discount and cancellation of bills. It has also been stated by the ICAI that adjustments which do not relate to turnover should not be made, for example writing off bad debts, royalty etc. Our attention was also drawn to the dictionary meanings of the words "turnover" and "total turnover" appearing in the Oxford Dictionary of Accounting and New Websters Dictionary of the English language. Extracts from these dictionaries have been placed between pages 70 to 73 of the case law paper book. On the basis of these, it is contended that "turnover" represents what is available with the assessee to be turned over and mere reimbursement of expenses is not of such nature. It is submitted that the definition of 'export turnover' in section 10B provides for exclusion of two items which are in the nature of mere reimbursements of expenses and if these cannot be part of export turnover, logically they cannot form part of total turnover also. In this behalf, our attention was drawn to the judgment of the Kerala High Court in Commissioner Of Income-Tax v. (1) K. Rajendranathan Nair [2004] 265 ITR 35 . In this case, the High Court was concerned with section 80HHC. Clause (ba) of the Explanation below that section did not contain an exhaustive definition of the words "total turnover" but merely stated that freight and insurance attributable to the transport of goods and merchandise beyond the customs station was not includible in the total turnover. The Kerala High Court held that in order that an amount must be included in the total turnover it must either be the purchase price or the sale price or something incidental to the transfer of the goods dealt with by the assessee. Relying on this judgment it is contended before us that reimbursement of expenses, which cannot be treated as consideration for the sale or export of the goods, and which has been excluded from the export turnover should also be excluded from the total turnover. Our attention was also drawn to the Memorandum explaining the provisions in the Finance (No. 2) Bill, 1991 reported in [1991] 190 ITR (St.) p. 270. At page 300, it was recognized that whereas in section 80HHC the definition of the term 'export turnover' excluded freight and insurance attributable to the transport, no such exclusion was specified in respect of the term 'total turnover' as a result of which, in CIF transactions (i.e., Cost, Insurance and freight) while the export turnover was taken at FOB value (free-on-board), the total turnover included the sale proceeds of exports at CIF value. There was thus an anomaly between the figures of export turnover and total turnover. The Memorandum states that with the view to removing this anomaly, it was proposed to clarify with retrospective effect from 1-4-1987 that the expression "total turnover" in section 80HHC will also not include freight or insurance. Relying on this Memorandum it was submitted on behalf of Sak Soft Ltd., that even the Legislature wanted to ensure parity between the export turnover and the total turnover in section 80HHC. It was submitted that there is no reason why the parity principle should not be incorporated in section 10B also.

10. It was further submitted, referring to the judgment of the Supreme Court in Lakshmi Machine Works' case (supra), that in the penultimate paragraph of the judgment the Supreme Court itself recognized, while interpreting section 80HHC that subsequently amendments have been made to the section excluding certain receipts such as commission, interest etc., from the "profits of the business" and this has given rise to three types of profits, namely, book profits, actual profits and statutory profits. Having noticed this position, the Supreme Court clarified that their reasoning in the judgment holding that what is excludible from export turnover should also be excluded from the total turnover should be confined to the workability of the formula in the section as it stood at the material time, namely, before the amendments. On the basis of this clarification in the penultimate paragraph of the judgment, it is contended that if the statute does not provide for a definition of 'total turnover', as is the case in section 10B or has provided only for a negative definition, there is no impediment to incorporating the parity principle in order to ensure that both export turnover and total turnover contain the same elements.

11. It was next contended, in anticipation of what could be possibly raised by the department, that the judgment of the Supreme Court in CIT v. K. Ravindranathan Nair [2007] 295 ITR 228 which is believed by the department to be against the assessee insofar as the parity principle is concerned, is not really so and even in this judgment, contrary to what the department would contend, the Supreme Court has actually reiterated and reaffirmed the parity principle and but for the clear statutory provision, would have actually applied the parity principle in that case also. It was submitted that the ratio of the judgment is that the parity principle is normally to be applied as a sound principle of law and logic and can be given up only when there is a clear statutory provision excluding the same. Our attention in this connection was drawn to the relevant observations of the judgment which we shall discuss at the appropriate juncture.

12. It was lastly contended on behalf of Sak Soft Ltd., that section 10B is a beneficial provision and, therefore, should be interpreted liberally in accordance with the well settled rules of interpretation.

13. We may now advert to the submissions made on behalf of Cognizant Technology Solutions and Covansys (India) (P.) Ltd., interveners in the appeals. They are as under :

(a) The question is to be decided by applying first principles since there is no statutory definition of total turnover in section 10B as contrasted with section 80HHC.
(b) On first principles, the parity principle is clearly applicable as explained by the Bangalore Bench in the case of Tata Elxsi Ltd. ( supra).
(c) Circular No. 621, dated 19-12-1991, reported in 1992 [195 ITR (St.) 154] says in paragraphs 32.18 and 32.19 that exclusion of certain items from the export turnover without excluding those items from the total turnover has resulted in an anomaly and, therefore, the Finance (No. 2) Act, 1991 provided for uniformity or parity in the definitions of 'export turnover' and 'total turnover' in section 80HHC, with retrospective effect from 1-4-1987. Thus, the Legislature itself has recognized the parity principle.
(d) The Supreme Court in the case of K. Ravindranathan Nair ( supra) has actually blessed the theory of parity and there are observations to this effect at page 239 of the judgment.
(e) The benefit given by the section should not be artificially whittled down in the absence of clear provisions of law giving authority to do so.
(f) In a number of orders the various Benches of the Tribunal, including those in Chennai and Bangalore, have expressed the view that parity should be maintained between export turnover and total turnover. In the case of Synco Industries Ltd. v. Assessing Officer [2008] 299 ITR 444, it has been observed by the Supreme Court at page 454 that it is a well settled rule that where the predominant majority of the High Courts have taken a certain view on the interpretation of certain provisions, the Supreme Court would lean in favour of the predominant view. Applying the same rule of interpretation, it is submitted that this Special Bench should also lean in favour of the majority view of the Tribunals which is that the rule of parity is applicable to the interpretation of section 10B.
(g) In paragraph 9 of Circular No. 564, dated 5-7-1990 reported in [1990] 184 ITR (St.) 137, the CBDT has recognized the need to adopt a uniform interpretation of the terms 'export turnover' and 'total turnover' by observing that in the case of an assessee who is exclusively doing export business, the export turnover and total turnover would be identical. In the illustrations given in the said paragraph, this principle is also recognized. If both are to be identical, it implies that what is excluded from export turnover should also be excluded from the total turnover. Some calculations were filed to illustrate how the department's interpretation of section 10B, ignoring the parity principle between export turnover and total turnover, would result in less benefit or relief to the assessee engaged exclusively in export business, which would be contrary to the view expressed by the Board in the above circular.

14. The submissions made on behalf of Adventnet Development Centre (India), in which the issue involved is whether the telecommunication charges which are excluded from the export turnover as per the definition in clause (iii) of Explanation 2 below section 10B should also be excluded from the total turnover which is not defined, are as follows :

(a) In K. Ravindranathan Nair's case ( supra) the principle of parity laid down in the case of Lakshmi Machine Works' ( supra) has not been upset or given the go-by as would be clear from the last paragraph of the judgment in which CA No. 3167 was dismissed by the Supreme Court following its decision in Lakshmi Machine Works' case ( supra).
(b) In any case, the case of the intervener is different on facts. In the case of K. Ravindranathan Nair ( supra), the processing charges were received as part of the assessee's business receipts since the facts of that case show that the assessee had complete infrastructure and plant and machinery in his factory for processing cashew nuts and he processed cashew nuts supplied to him by exporters on job-work basis. In the intervener's case, recovery of telecommunication charges is not the business of the assessee. It is a mere reimbursement of the expenses incurred by the assessee and there is no profit element included therein whereas in the case before the Supreme Court there was a profit element embedded in the processing charges since processing was the business of that assessee. The profit element is very relevant because of the judgment of the Bombay High Court in the case of Sudarshan Chemicals Industries Ltd. ( supra), where it was observed that excise duty and sales-tax cannot form part of the total turnover as they did not have any element of profit.
(c) Explanation 2( iii) below section 10B which defines 'export turnover' refers to "consideration" received for the export of software. Logically therefore, the expression 'total turnover' should also be understood as referring only to any "consideration" received for the sales made locally as well as export sales. The freight, telecommunication charges or insurance attributable to the delivery of the software outside India or other expenses incurred in foreign exchange in providing technical services outside India are merely in the nature of reimbursement of the expenses incurred by the assessee and do not represent consideration for the sale or export of the software. Therefore, they should not be included in the total turnover. Reliance is placed on the judgment of the Karnataka High Court in Bharat Earth Movers Ltd.'s case ( supra) where it was held that while logic need not always be the basis for taxing provision, it does not follow that a taxing provision logically made should be interpreted illogically or asymmetrically merely because it is a taxing statute.
(d) The concept embedded in section 80HHE should be brought into and incorporated in section 10B. Under clause ( c) and clause ( e) of the Explanation below section 80HHE, both export turnover and total turnover have been defined not to include the freight, tele-communication charges or insurance attributable to the delivery outside India and expenses incurred in foreign exchange in providing technical services outside India. This rule of parity should also be incorporated into the provisions of section 10B. In support of this proposition reliance is placed on the judgment of the Supreme Court in Donald Miranda v. CIT [1961] 42 ITR 166 where the earlier judgment of the Supreme Court in McGregor & Balfour Ltd. v. CIT [1959] 36 ITR 65 was cited and the following observations made therein were quoted with approval :
"The object and purpose of the legislation in each case is the same, and though the two provisions are not ipsissima verba, they are substantially in the same words and also in pari materia . . . . there can be no doubt that the intention underlying the two provisions is the same and the language is substantially similar".
(e) Reliance is also placed on the judgment of the Karnataka High Court in Sanjeev V. Kudva v. CIT [1981] 127 ITR 354, the judgment of the Delhi High Court in CIT v. SAE Head Office Monthly Paid Employees' Welfare Trust [2004] 271 ITR 159 and the judgment of the Supreme Court in CIT v. Taj Mahal Hotel [1971] 82 ITR 44 in support of the submission that the popular sense of the expression should be adopted if it is not statutorily defined and that as far as possible there should be uniformity of judgments while interpreting an all India statute such as the Income-tax Act.

15. On behalf of the interveners M/s. Max Health Scribe Ltd., and Crimson Logic India (P.) Ltd., the following submissions were made :

(a) The judgments of the Supreme Court in Lakshmi Machine Works' case ( supra) and K. Ravindranathan Nair's case ( supra) lay down two different concepts. In the former, the Supreme Court was concerned with the comparison between the export turnover and the total turnover and more particularly with the question whether certain items of receipt such as sales-tax, excise duty etc., should be excluded from both. On the other hand, in K. Ravindranathan Nair's case ( supra); the Supreme Court was concerned with the question whether any additions have to be made to the profits of the business and the total turnover. The formula consists of three parts, namely, the profits of the business, the export turnover and the total turnover. In LMW's case ( supra ), the comparison was between the numerator and denominator, i.e., the export turnover and the total turnover. However, in, K. Ravindranathan Nair's case ( supra); only the denominator was being compared with the profits of the business. Both the judgments thus compare different components of the formula and therefore they stand independently. If a case concerns the comparison between the export turnover and the total turnover it can be pigeon-holed into LMW's case ( supra) and if it concerns the relationship between the profits of the business and the total turnover it can be put under the category of K. Ravindranathan Nair's case ( supra). However, export turnover and total turnover belong to the same family in the sense that both are species of turnover. But the relationship between the profits of the business and the total turnover is somewhat different in the sense that the turnover contributes to the profits and in that sense it can be said that both do not belong to the same family. The submission is that because of the above, wherever export turnover and total turnover are to be compared, it is the ruling of the Supreme Court in LMW's case ( supra) that should be applied and not that in K. Ravindranathan Nair's case ( supra). It means that whatever is to be excluded from export turnover should also be excluded from total turnover. Reliance is also placed on the observations of the Supreme Court in T. R. Prabhakar v. CIT [2006] 284 ITR 548 at 555.
(b) There can be no discrimination between a hundred per cent exporter and a person who is also having domestic turnover. If telecom charges are to be excluded from both export turnover and total turnover in the case of a hundred per cent exporter, the same procedure should be followed even in the case of the person who has some domestic turnover. This is what has been stated even by the CBDT in its Circular No. 564, dated 5-7-1990 ( supra). This is also supported by the judgment of the Karnataka High Court in Bharath Earth Movers Ltd.'s case ( supra) where the role of logic in a taxing statute has been recognized and followed. In the Special Bench order of the Tribunal in the case of IFB Agro Industries Ltd. ( supra) the re-framed question (at page 98) clearly brings out the controversy whether the parity principle is to be applied while interpreting the expressions 'export turnover' and 'total turnover' appearing in section 80HHC. It is noteworthy that for the assessment year before the Special Bench there was a statutory definition of 'total turnover' in section 80HHC specifying what is to be excluded from it, nevertheless the Special Bench approved the order of the Division Bench in Chloride India Ltd. v. Dy. CIT [1995] 53 ITD 180 (Cal.) which decided the case on first principles since there was no definition of 'total turnover' in section 80HHC for the assessment year 1986-87 which was before it.

Summary of the arguments of the Income-tax Department :

16. On behalf of the revenue, the above contentions were strongly opposed and the following submissions were made in support of the view taken by the Assessing Officer :

(a) The mandate of clause ( iii) of Explanation 2 below section 10B is to exclude certain items from the export turnover but there is no such mandate given in the section to exclude anything from the total turnover. In fact, there is no definition of 'total turnover' in the section.
(b) Circular No. 564, dated 5-7-1990 was issued with reference to section 80HHC and not section 10B. In the former, the expression 'total turnover' was defined by an amendment made by the Finance (No. 2) Act, 1991 to remove the anomaly (as recognized in Circular No. 621, dated 19-12-1991) but no such amendment was made in section 10B. Parliament in its wisdom has not thought it fit to make any amendment in section 10B to remove the alleged anomaly.
(c) The Explanations below sections 80HHC, 80HHE and 80HHF, all of which contain definitions of both 'export turnover' and 'total turnover' and exclude from both expressions the freight, telecom charges or insurance and expenses incurred in foreign exchange in providing technical services outside India, are expressly stated to be for the purposes of those sections only. They cannot be incorporated by implication into section 10B.
(d) As is clear from paragraph 17 of the judgment of the Supreme Court in the case of LMW ( supra ), the judgment is confined to the facts of that case and the ratio laid down therein cannot be lifted and incorporated into section 10B.
(e) In K. Ravindranathan Nair's judgment ( supra), the Supreme Court rejected the parity theory and this will be further clear on a reference to paragraph 18 of the judgment of the Kerala High Court in K. Rajendranathan Nair's case ( supra).
(f) The scheme of sections 10A and 10B on the one hand and that of sections 80HHC, 80HHE and 80HHF on the other, are different and, therefore, the definition of 'total turnover' in the latter sections cannot be automatically imported into the former as claimed on behalf of the assessee and the interveners.
(g) Logic cannot supply what is not provided by law and merely because certain items are to be excluded from export turnover by definition it does not follow logically that those same items should also be excluded from the total turnover which has not been defined in section 10B. Reference in this connection has been made to the judgment of the Supreme Court in Union of India v. Dharmendra Textiles Processors [2008] 306 ITR 277 where it was held that the court cannot read anything into a statutory provision which is plain and unambiguous and that while interpreting a provision the court cannot legislate. Further casus omissus ought not to be created by interpretation save in the case of strong necessity. Reference is also made to the order of the Special Bench of the Tribunal in Aztec Software & Technology Services Ltd. v. Asstt. CIT [2007] 107 ITD 141 (Bang.) where in paragraph 13, the same principle was reiterated. Reference in this connection was also made to the order of the Chennai Bench of the Tribunal in the case of I Soft R & D (P.) Ltd. v. Asstt. CIT [IT Appeal 465 (Mad.) of 2007, dated 12-5-2008]. It was further argued that equitable considerations are irrelevant in interpreting the provisions of a taxing statute.
(h) Though it is true that provisions granting relief from tax have to be beneficially interpreted, that rule has to give way where express statutory provisions do not permit the same as has been held by the Supreme Court in the case of Ipca Laboratory Ltd. v. Dy. Commissioner Of Income Tax, Mumbai [2004] 266 ITR 521 .
(i) Section 10B cannot be interpreted in the same manner as section 80HHE because the former is not in continuation of the latter. In fact, section 80HHE was inserted with effect from 1-4-1991, whereas section 10B was inserted earlier with effect from 1-4-1989. Thus section 10B cannot be a continuation of section 80HHE.
(j) The judgments of the Supreme Court in LMW's case ( supra) and K. Ravindranathan Nair's case ( supra) operate on different fields and they have not decided the controversy that has arisen in the present case.
(k) As held by the Supreme Court in Keshavji Ravji & Co. v. CIT [1990] 183 ITR 1 an artificial construction cannot be placed on an unambiguous statutory provision, whittling down the language used therein, merely to benefit the assessee.
(l) The orders of the Chennai Benches of the Tribunal in California Software Co. Ltd.'s case ( supra), I Soft R & D (P.) Ltd.'s case ( supra) and in the case of Changepond Technologies (P.) Ltd. v. Asstt. CIT [2008] 22 SOT 220 have laid down the correct interpretation of the expression 'total turnover' appearing in section 10B.
(m) The Assessing Officer has taken the total turnover in accordance with the books of account of the assessee Sak Soft Ltd., and, therefore, no disturbance is called for.

17. On the basis of the above contentions, it was submitted by the revenue that the total turnover was rightly taken by the Assessing Officer without excluding the items excluded in the definition of export turnover in clause (iii) of Explanation 2 below section 10B.

18. In their brief reply to the arguments of the department, the assessee and the interveners have made the following submissions :—

(a) In Commissioner Of Income Tax v. Catapharma (India) (P) Ltd. [2007] 292 ITR 641, the Supreme Court has reiterated the parity principle laid down in LMW's case ( supra).
(b) The accounting principles are irrelevant in understanding the term 'total turnover' and it has to be interpreted having in mind the judicial principles and precedents.
(c) The order of the Chennai Bench of the Tribunal in California Software Co. Ltd.'s case ( supra), on which the department has strongly relied, is not correct in bringing in the concept of net inflow of foreign exchange into the definition of 'export turnover' in section 10B because the condition that foreign exchange should be used by the assessee is applicable only to the expenses incurred in providing technical services outside India and not to the incurring of the expenses such as freight, telecom charges or insurance attributable to the delivery of the goods outside India. Such a distinction rules out the applicability of the concept of net inflow of foreign exchange.
(d) The reliance placed by the department on Dharmendra Textiles Processors' case ( supra) is not apposite. The department had contended that the Supreme Court has laid down that the court cannot read anything into a statutory provision or legislate and further a casus omissus cannot be created by interpretation except in the case of strong necessity. It is submitted that the Supreme Court itself has laid down exceptions to the above rule and has held (in the same decision) that an omission can be supplied by the court in the case of clear necessity and when reason for it is found in the four corners of the statute itself. Further, it has been held that all parts of a statute or section must be construed together and every clause of a section should be construed with reference to the context and other clauses thereof so that the construction to be put on a particular provision makes a consistent enactment of the whole statute. It has further been held that this would be more so if literal construction of a particular clause leads to manifestly absurd or anomalous results which could not have been intended by the Legislature. The submission is that the present case falls within these exceptions and if export turnover and total turnover are not interpreted in the same manner, especially when there is no definition of total turnover, it would lead to a manifestly absurd or unreasonable or anomalous result which could not have been intended by the Legislature.
(e) It was pointed out on behalf of the intervener M/s. Adventnet Development Centre that the decision of the Chennai Bench of the Tribunal in the case of I Soft R & D (P.) Ltd. ( supra) proceeded on an erroneous understanding of the judgment of the Supreme Court in K. Ravindranathan Nair's case ( supra). It was pointed out that in para 21 of the order, the Tribunal has stated that "for the first time the Supreme Court has held that it is possible in law to disturb the composition of export turnover and at the same time without making any such corresponding change in the total turnover. It means, the principle of parity does not apply in all cases in the light of the above judgment of the Supreme Court in the case of CIT v. K. Ravindranathan Nair [2007] 295 ITR 228 (SC). The contention of the intervener is that in K. Ravindranathan Nair's case ( supra), the Supreme Court was not concerned with the composition of export turnover but was concerned with the composition of the "profits of the business". The order of the Tribunal thus proceeds on a basic error and, therefore, should not be approved.

Consideration and decision

19. We have carefully considered the issue which is short but interesting. The basic issue to be resolved is whether parity should be maintained between the ingredients of export turnover and total turnover for the purpose of applying the formula prescribed by sub-section (4) of section 10B. The expression 'export turnover' has been defined in clause (iii) of Explanation 2 below the section, whereas there is no definition of the expression 'total turnover' for the purposes of the section. This is precisely the difficulty arising in this case and the question is whether the difficulty can be surmounted and if so by what means. The means suggested on behalf of the assessee and the interveners is that the expression 'total turnover' should also be interpreted in the same manner by excluding therefrom the freight, telecom charges or insurance attributable to the delivery of the articles or things or computer software outside India or expenses, if any, incurred in foreign exchange in providing the technical services outside India. We see merit in the contention. We have attempted, to the best of our ability, to understand the rationale behind such exclusion in the definition of 'export turnover'. Section 10B was first inserted by the Finance Act, 1988 with effect from the assessment year 1989-90. In the section as first inserted exemption was given to the entire profits and gains derived by the assessee from a hundred per cent export oriented undertaking. Detailed provisions were made in sub-section (4) as to the manner of computing the total income of the assessee for the purpose of granting the exemption. There was no definition of 'export turnover' or 'total turnover' because the exemption was not linked to any formula in which the export turnover and total turnover were the ingredients. The section was amended by the Finance Act, 1993 with retrospective effect from the assessment year 1991-92. A perusal of this Finance Act shows that the amendment made to the section is not in any way relevant for our purpose. The section was again amended by the Finance Act, 1994. Some amendments took effect from the assessment year 1994-95 and some of them took effect from the assessment year 1995-96. These amendments are also not relevant for our purpose. Thereafter amendments were made to the section by the Income-tax (Second Amendment) Act, 1998. These amendments are also not relevant for our purpose. The section was then substituted by the Finance Act, 2000 with substantial changes with effect from 1-4-2001, i.e., from the assessment year 2001-02. The Finance Act, 2000 is reported in (2000) 243 ITR (St) p.65. Section 10B was substantially changed by substitution. It is by this amendment that a definition of the term 'export turnover' was inserted in clause (iii) of Explanation 2 below the section. The Circular No. 794, dated 9-8-2000 issued by the CBDT containing Explanatory Notes on the provisions relating to Finance Act, 2000 is reproduced in (2000) 245 ITR (St.) 21. It is to be noted that the provisions of section 10A which made special provisions in respect of newly established undertakings in free-trade zone, etc., were simultaneously amended and the section was substantially modified by the same Finance Act. The circular, in para 15 thereof explained the new provisions substituted for the existing sections 10A and 10B. Para 15.2 says that the provisions have been substituted with a view to rationalize the concessions and to phase them out by the end of the assessment year 2009-10. Paragraph 15.6 explains sub-section (4) of section 10B and the formula prescribed therein. The same is reproduced below :

"15.6 For the computation of profits derived from the export of articles or things or computer software, sub-section (4) provides that the profits derived from such exports shall be the amount which bears to the profits of the business, the same proportion as the export turnover in respect of such articles or things or computer software bears to the total turnover of business. The profits of the business in the given context would mean the profits of the business carried on by the undertaking to which the provisions apply. The working formula for arriving at the export profits will be as under :

The export turnover and the total turnover for the purposes of sections 10A and 10B shall be of the undertaking located in specified zones or 100 per cent export oriented undertaking as the case may be and this shall not have any material relationship with the other business of the assessee outside these zones or units for the purposes of this provision."

The circular does not throw any light as to how the total turnover should be ascertained and what should be the ingredients thereof. It is to be noted that both in sections 10A and 10B, only the expression 'export turnover' is defined and there is no definition of the term 'total turnover'.

20. Section 80HHC is also a section which grants deduction in respect of profits retained for export business. Clause (b) of the Explanation below the section defines 'export turnover' as meaning the sale proceeds received in or brought into India by the assessee in convertible foreign exchange of any goods or merchandise which are exported out of India, but does not include freight or insurance attributable to the transport of the goods beyond the customs station as defined in the Customs Act, 1961. Clause (ba) inserted by the Finance (No. 2) Act, 1991 with retrospective effect from 1-4-1987 defined the term 'total turnover' and stated that it shall not include freight or insurance attributable to the transport of the goods or merchandise beyond the customs station as defined in the Customs Act. The proviso to this clause, which took effect from 1-4-1991 clarified that total turnover would also exclude the incentives referred to in the various clauses of section 28. In Circular No. 621, dated 19-12-1991 (supra) the CBDT explained the rationale behind the insertion of the definition of 'total turnover' with retrospective effect. This is contained in paras 32.18, 32.19 and 32.20 of the circular. It would be better to reproduce these paragraphs:

"32.18 Whereas the definition of the term 'export turnover' excludes freight and insurance attributable to transport, no such exclusion has been specified in respect of the term 'total turnover'. As a result, in CIF transactions, while the export turnover is taken at FOB value, the total turnover includes the sale proceeds of exports at CIF value.

32.19 With a view to removing this anomaly, it has now been clarified that 'total turnover' will also not include such freight or insurance.

32.20 This amendment takes effect retrospectively from 1-4-1987, the day from which "total turnover" became relevant for the purpose of computation of deduction under section 80HHC. It will, accordingly, apply in relation to assessment year 1987-88 and subsequent years."

It seems to us that the CBDT was of the opinion that whatever has been excluded from the export turnover should also be excluded from the total turnover and otherwise it would be an anomaly. By implication at least, the CBDT seems to be of the view that parity should be maintained between both the expressions. Before the insertion of the definition of 'total turnover' by clause (ba) of the Explanation, there was no definition of 'total turnover' in section 80HHC. The expression had to be given a meaning and it was done by the Calcutta Bench of the Tribunal in the case of Chloride (India) Ltd. (supra). There the question was whether the sales-tax and excise duty which are not leviable on export turnover and, therefore, did not form part of the export turnover, should be included in the total turnover as was done by the Assessing Officer in that case. The Calcutta Bench held that there should be parity between the numerator in the formula (export turnover) and the denominator (total turnover) despite the fact that there was no definition of the total turnover in the section as it stood for the assessment year 1986-87 which was the year before the Tribunal. That case was thus decided on first principles, the principle applied being that there should be uniformity in the ingredients of both the numerator and the denominator of the formula since otherwise it would produce anomalous or absurd results. This order was upheld by the Calcutta High Court in Chloride India Ltd.'s case (supra). Subsequently, a Special Bench was constituted in Calcutta in the case of IFB Agro Industries Ltd. (supra), consisting of three Members of the Tribunal since the Assessing Officer took the view in that case that the order of the Tribunal in the case of Chloride India Ltd. (supra) pertained to the assessment year 1986-87 in which year the expression 'total turnover' was not defined in the section whereas from the assessment year 1987-88 clause (ba) has been inserted in the Explanation defining 'total turnover' which excluded only freight or insurance and, therefore, sales-tax or excise duty cannot be excluded from total turnover. The order of the Special Bench in IFB Agro Industries Ltd.'s case (supra). The question before the Special Bench was whether the excise duty and sales-tax should be excluded from the total turnover "for the purpose of bringing parity between the numerator, viz., export, turnover and the denominator 'total turnover' in the said formula, inasmuch as export turnover does not include excise duty and the sales-tax which are not leviable on exportable goods". The contention of the revenue before the Special Bench, which is alluded to in para 8 of the order was that "when particular items alone are excluded, the general meaning excluding only those specified enumerated receipts should be given to the term". The Special Bench proceeded to examine the general meaning of the expression 'total turnover' and apart from several authorities, reference was also made to Circular No. 621 (supra). On an examination of the relevant authorities, including Supreme Court judgments, the Special Bench held that excise duty and sales-tax constitute part of the turnover and trading receipts of the business and, therefore, the term 'total turnover' should be taken as inclusive of these levies. However, the Special Bench was unable to apply the general meaning of the term to the case before them and decide the matter in favour of the revenue, because of the judgment of the Bombay High Court in the case of Sudarshan Chemical Industries Ltd. (supra), and the judgment of the Calcutta High Court in Chloride India Ltd.'s case (supra). The Special Bench particularly noticed that the Calcutta High Court, even after referring to the judgment of the Supreme Court in the case of McDowell & Co. Ltd. v. CTO [1985] 154 ITR 148 held that the definition of 'turnover' in one enactment (sales-tax law) may not hold good under all other enactments. Ultimately the Special Bench came to the conclusion that "it could be visualized that it may not always be true that the term 'turnover' included excise duty and it depends upon the provisions of law and the fact that the excise duty did not go into the common till of the assessee and did not become part of circulating capital" (para 23 of the order). In para 25, the Tribunal concluded as under:

"25. In view of the aforesaid discussion, we are of the opinion that though 'total turnover' may include the receipts of excise duty and sales-tax etc., in its general parlance and under specific statute, because of its wider coverage in the definitions given thereunder, it has to be given a restrictive meaning while computing the 'export profit' for the purposes of section 80HHC namely only that part of the receipt for sale consideration is to be taken as part of the total turnover which has an element of profit therein and, accordingly, the receipts of excise duty and sales-tax which do not include an element of profit should be excluded from 'total turnover'."

It would be seen that the ultimate decision of the Special Bench rested on the reason that anything which has an element of profit alone can be included in the total turnover. The Special Bench has also recognized that it is possible to restrict the general meaning of turnover considering the particular context of the statute under consideration.

21. A perusal of the judgment of the Bombay High Court in Sudarshan Chemicals Industries Ltd.'s case (supra ) shows that not only did the High Court hold that excise duty and sales tax cannot be included in the total turnover for the purpose of section 80HHC as they do not have any element of profit, but have also held that parity should be maintained between the export turnover and the total turnover which are the numerator and denominator respectively in the formula. This would be clear from the following observations of the court (at page 773 of the report) :

"Further, the meaning of export turnover in clause (b) of the Explanation to section 80HHC, therefore, clearly shows that export turnover did not include excise duty and sales tax. The export turnover is the numerator in the above formula whereas the total turnover is the denominator. The above formula has been prescribed to arrive at the profits from exports. In the circumstances, the above two items, namely, sales tax and excise duty, cannot form part of the total turnover. In fact, if the denominator was to include the above two items and if the numerator excluded the above two items, then the formula would become unworkable. In the circumstances, we are of the view that in order to ascertain the export profits, the above two items cannot be introduced to inflate the total turnover artificially in order to reduce the benefit which an assessee is entitled to." [Emphasis supplied]

22. We may now look at the judgment of the Calcutta High Court in Chloride India Ltd.'s case (supra). A perusal of the observations of the court at page 629 of the report shows that the parity principle was accepted in that decision also :

"This formula was introduced in section 80HHC(3) of the Act as it stood at the relevant time. In the above formula the export turnover is the numerator whereas the total turnover is the denominator. There can hardly be any room for scepticism that the said formula had been prescribed to arrive at the profits from exports. It was rightly contended by Dr. Pal that if the denominator was to include octroi, sales tax and excise duty and if the numerator excluded those items the formula would certainly become unworkable." [Emphasis supplied]

The Calcutta High Court also agreed with the Bombay High Court judgment (supra) and held that since octroi, excise duty and sales-tax cannot have any element of profit and, therefore, these items cannot be included in the total turnover. Thus both in the Bombay and Calcutta judgments the cases were decided not only on the footing that the sales-tax, octroi and excise duty which were statutory levies did not contain any element of profit and hence were not includible in the total turnover, but they were also decided on the reasoning that parity should be maintained between the ingredients of the export turnover and total turnover which were the numerator and denominator respectively in the statutory formula prescribed by section 80HHC.

23. The above discussion shows that the Special Bench of the Tribunal in the case of IFB Agro Industries Ltd. (supra), the Bombay High Court in the case of Sudarshan Chemicals Industries Ltd. (supra) and the Calcutta High Court in the case of Chloride India Ltd. (supra) were all of the view that parity should be maintained between the export turnover and the total turnover appearing in section 80HHC of the Act.

24. We now proceed to a consideration of the judgment of the Supreme Court in the case of LMW (supra). This case arose with reference to the assessment year 1993-94. The short point which arose for consideration before the Supreme Court was whether excise duty and sales-tax were includible in the total turnover which was the denominator in the formula contained in section 80HHC(3) as it stood at the relevant time. It must be remembered that clause (b) of the Explanation defined 'export turnover' as the sale proceeds received or brought into India in convertible foreign exchange, of any goods or merchandise exported out of India, but excluding freight or insurance attributable to the transport of the goods beyond the customs station. Clause (ba) defined 'total turnover' as not including freight or insurance attributable to the transport of the goods beyond the customs station. In this case the following propositions were laid down by the Supreme Court :

(i) While interpreting the words 'total turnover' in the formula, a schematic or purposeful interpretation to the words has to be given since the section is entirely based on the formula.
(ii) The formula has to be read in entirety.
(iii) The legislative changes made to the section indicate that the Legislature intended to exclude certain items of receipts (like commission and interest) from the deduction as they did not possess any element of turnover, though they may have emanated from the exports.
(iv) The words 'total turnover' in the formula cannot be interpreted with reference to the definition of the word 'turnover' in other laws like the Central Sales Tax Act or as defined in accounting principles.
(v) Anything which does not involve "turnover" cannot be included in the expression 'total turnover'. That is why receipts such as commission, rent, interest etc., are excluded from the profits of the export. These receipts did not emanate from the export turnover, much less any turnover.
(vi) Similarly excise duty and sales-tax do not involve any such turnover and, therefore, they have to be excluded from the total turnover. These receipts are recovered by the assessee on behalf of the Government, being indirect taxes.

The above propositions laid down in the judgment unmistakably show that the principle of parity between export turnover and total turnover was affirmed by the Supreme Court in the case of LMW (supra). The contention of the revenue before us was that the judgment is confined to the facts of the case. Certainly every judgment is rendered on the basis of the facts of the case. But where a ratio is laid down and that is applied to the facts of the case, the ratio is applicable to similar fact-situations. In our understanding the ratio laid down by the Supreme Court in the case of LMW (supra ) is an affirmation of the principle of parity between the export turnover and the total turnover for the purpose of section 80HHC. It was also the ratio laid down in that case that any receipt which does not have an element of turnover cannot find a place either in the export turnover or in the total turnover. LMW's case (supra) was followed by the Supreme Court in Catapharma (India) (P.) Ltd.'s case (supra), where the assessment year involved was 1997-98.

25. We now proceed to examine the contention of the revenue that the principle of parity between export turnover and total turnover was rejected by the Supreme Court in K. Ravindranathan Nair's case (supra). In this case the narrow dispute which arose for determination was whether the department was right in including the processing charges received by the assessee in the total turnover while arriving at the export profits under section 80HHC(3) as it stood in relation to the assessment year 1993-94. The contention of the assessee before the Supreme Court inter alia was that though such charges were includible in the business profits as per clause (baa) of the Explanation below section 80HHC, they were not includible in the total turnover as they had no nexus with the activity of exports (please see page 232 of the report). On the other hand, the contention of the revenue was that in view of clauses (ba) and (baa) of the Explanation, when the processing charges were includible in the business profits the same were simultaneously includible in the total turnover in the formula (please see page 232 of the report). It will thus be seen that the comparison in K. Ravindranathan Nair's case (supra) was between the profits of the business, which was one of the components of the formula, and the total turnover which was also a component of the formula, whereas in LMW's case (supra) the comparison was between the export turnover and the total turnover which were respectively the numerator and the denominator in the formula. This aspect which was highlighted before us by the learned representative for the interveners Max Health Scribe Ltd., and Crimson Logic India Pvt. Ltd., is important and has to be borne in mind while understanding the ratio of the judgment in K. Ravindranathan Nair's case. According to the Supreme Court, the assessee's contention that the processing charges were includible in the profits of the business but excludable from the total turnover cannot be accepted because the processing charges which were part of the gross total income, were an independent income like rent, commission etc., and, therefore, 90 per cent of the said sum should be reduced from the gross total income to arrive at the business profits and since the processing charges were an important component of business profits, they were to be included in the total turnover in the formula prescribed to arrive at the business profits in terms of clause (baa) of the Explanation. One other contention was raised before the Supreme Court on behalf of the assessee and that was that the processing charges had no nexus with the export business and, therefore, they were not includible in the total turnover (please see page 240 of the report, last para). It was also contended that there was no element of turnover in the receipt of processing charges (page 240 of the report). For these two reasons it was contended that the processing charges were not includible in the total turnover. This argument was rejected by the Supreme Court at pages 241-242 of the report. While rejecting the argument, the Supreme Court explained that under section 80HHC which was a code by itself for the assessment year 1993-94, receipts constituting independent income having no nexus with exports were required to be reduced from the profits of the business according to clause (baa) of the Explanation, and since even according to the assessee the processing charges had no nexus with the export business and thus constituted independent income, they were to be reduced from the profits of the business. It was further observed that every income may not be attributable to the exports (as in the case of processing charges) and that was the reason "for this court to hold that indirect taxes like excise duty which are recovered by the tax payers for and on behalf of the Government, shall not be included in the total turnover in the above formula (see Commissioner Of Income Tax, Coimbatore v. Lakshmi Machine Works [2007] 6 Scale 168)". The court referred to the fact that since even according to the assessee the processing charges had no nexus with the export and constituted independent income similar to rent, commission, brokerage etc., the same had to be reduced to the extent of 90 per cent as per the above Explanation from the profits of the business. However, they were includible in the total turnover in the formula. At page 242 the Supreme Court gave the reason as to why their judgment in LMW's case (supra) can have no application to the case before them. The court reasoned that the nature of every receipt needs to be ascertained in order to find out whether it forms part of or has any attribute of an export turnover. Referring to the earlier judgment in LMW's case (supra), the court observed that an indirect tax like excise duty is collected by the assessee on behalf of the Government and though it may be possible to consider the same as income in a conceptual sense (of something coming in) or income under the Income-tax Act, while applying the formula prescribed by section 80HHC(3), it is necessary to ascertain whether the said receipt has an attribute of export turnover. Since the recovery of excise duty did not have the element of export turnover, it was held not includible in the total turnover in the case of LMW's case (supra). It will be appreciated from these observations of the Supreme Court appearing in pages 241 and 242 of K. Ravindranathan Nair's case (supra), that the court itself made a distinction between the ratio laid down in the case of LMW (supra) and that laid down in the case of K. Ravindranathan Nair (supra). A receipt which does not have an element of turnover cannot find a place in the export turnover or the total turnover for applying the formula prescribed by section 80HHC, even though it may be an income in the general sense. If it is an independent income having no nexus with the export business then such income has to be excluded also from the profits of the business to the extent of 90 per cent. Both the judgments stand independently. Whereas in the case of LMW (supra) the comparison was between export turnover and total turnover, in the case of K. Ravindranathan Nair (supra) the comparison was between profits of the business and total turnover. As rightly pointed out by the learned representative for the interveners Max Health Scribe Ltd., and Crimson Logic India (P.) Ltd., there is an inter se relationship between profits of the business and total turnover in the sense that the total turnover contributes to the profits. It may be that because of the statutory definition of profits of the business in clause (baa) of the Explanation below section 80HHC that income which is independent of the export activity has to be excluded therefrom to the extent of 90 per cent; nevertheless the processing charges received by the assessee would be includible in the total turnover as laid down in K. Ravindranathan Nair's case (supra). It has to be borne in mind that the present definition of 'profits of the business' in clause (baa ) of the Explanation was inserted by the Finance (No. 2) Act, 1991 (with effect from 1-4-1992). Before this definition was inserted, clauses (a) and (b) of sub-section (3) of section 80HHC stipulated that profits derived from the export of goods shall be the entire profits of the business as computed under the head "Profits and gains of business or profession" where the business of the assessee consists entirely of exports; where the business consists partly of exports and partly local sales, even then the profits of the business as computed under the head "Profits and gains of business or profession" had to be divided in the same proportion which the export turnover bears to the total turnover of the business. Thus, the export profits were to be computed taking the profits assessed under the head 'Business' as the basis. This gave room for inclusion of receipts such as brokerage, commission, interest, rent or any other receipt of a similar nature (which did not have any element of turnover but which were included in the profit and loss account), in the profits of the business since such receipts were also assessed as business income. This peculiar position was eliminated by the Finance (No. 2) Act, 1991 and in Circular No. 621, dated 19-12-1991 (supra) it was explained in paragraphs 32.10 and 32.11 that the amended definition of 'profits of the business' in clause (baa ) of the Explanation was introduced to clarify that such receipts which do not have an element of turnover will not be included as profits of the business to the extent of 90 per cent, a deduction of 10 per cent being given towards common expenses. But for this definition introduced by the Finance (No. 2) Act, 1991, there was no scope for excluding incomes which did not have any nexus with the export activity or which did not have an element of turnover from the profits of the business if such incomes had been assessed under the head "Business". It may be recalled that the assessment year before the Supreme Court in K. Ravindranathan Nair's case (supra) was 1993-94 for which year clause (baa) of the Explanation was applicable. Since the assessee in that case did not dispute that processing charges received by him had no nexus with the export business and thus constituted independent income, 90 per cent thereof had to be statutorily excluded from the profits of the business which would not have been possible if the earlier definition of the export profits in clauses (a) and (b) of sub-section (3) of section 80HHC had continued. The said sub-section was simultaneously substituted by the Finance (No. 2) Act, 1991 with effect from 1-4-1992. Therefore, the Supreme Court did not apply the parity principle in K. Ravindranathan Nair's case (supra) between the profits of the business and the total turnover and held that though 90 per cent of the processing charges were to be reduced from the profits of the business, they cannot be excluded from the total turnover. At first reading it would certainly appear, as was contended before us by the department, that in K. Ravindranathan Nair's case (supra) the Supreme Court has given a go-by to the parity principle earlier recognized in LMW's case (supra), but on deeper consideration it seems to us that it was because of the statutory definition of the "profits of the business" excluding receipts which do not have an element of turnover or which had no nexus with the export activity that the processing charges had to be excluded from the profits of the business though not from the total turnover. This, coupled with the fact that the Supreme Court itself has brought out the distinction between LMW's case (supra ) and K. Ravindranathan Nair's case (supra) at pages 241-242 persuades us to hold that in a case where the export turnover is to be compared with the total turnover, it is the former judgment in the case of LMW (supra ) that will govern the decision and not the judgment in the case of K. Ravindranathan Nair (supra).

26. We may now refer to section 10B where clause (iii) of Explanation 2 defines 'export turnover'. There is no definition of 'total turnover'. If the parity principle is to be applied, it follows that whatever has been excluded from the export turnover by the definition shall stand excluded from the total turnover also. The position would be somewhat similar to the case before the Calcutta Bench of the Tribunal in the case of Chloride India Ltd. (supra). In clause ( iii) of Explanation 2 to section 10B, the freight, telecom charges and insurance attributable to the delivery of the goods outside India and expenses incurred in foreign exchange in providing technical services outside India have been excluded from export turnover. Therefore, the same have to be excluded also from the total turnover though that expression has not been defined in the section. The argument of the department before us is that in the absence of any definition of 'total turnover' for the purpose of section 10B, there is no authority to exclude anything from the expression as understood in general parlance. We are unable to give effect to the argument for two reasons. Firstly, as held by the Supreme Court in the case of LMW (supra), there has to be an element of turnover in the receipt if it has to be included in the total turnover. That element is missing in the case of freight, telecom charges or insurance attributable to the delivery of the goods outside India and expenses incurred in foreign exchange in connection with the providing of technical services outside India. These receipts can only be received by the assessee as reimbursement of such expenses incurred by him. Mere reimbursement of expenses cannot have an element of turnover and in this we agree with the learned representative for the assessee before us (Sak Soft Ltd.). It is only in recognition of this position that in the definition of 'export turnover' in section 10B the aforesaid two items have been directed to be excluded. Secondly, as rightly pointed out on behalf of Adventnet Development Centre (India) by its learned representative, the definition of export turnover contemplates that the amount received by the assessee in convertible foreign exchange should represent "consideration" in respect of the export. This can only refer to the price of the computer software exported out of India. Any reimbursement of the two items of expenses mentioned in the definition can under no circumstances be considered to represent "consideration" for the export of the computer software or articles or things. Thus there is evidence inherent in the definition of 'export turnover' itself that it should represent "consideration" for export of the articles or things or computer software. It follows that the expression 'total turnover' which is not defined in section 10B should also be interpreted in the same manner. Thus the two items of expenses referred to in the definition of 'export turnover' cannot form part of the total turnover since the receipts by way of recovery of such expenses cannot be said to represent consideration for the goods exported. In this behalf, it must be borne in mind that total turnover is nothing but the aggregate of the domestic turnover and the export turnover. The formula prescribed by section 10B(4), differently expressed, will be as follows :

It will be seen from the above that the figure of export turnover has to be the same both in the numerator and in the denominator of the formula. It follows that the total turnover cannot include the two items of expenses recovered by the assessee and referred to in the definition of 'export turnover'. This aspect of the matter has been highlighted by the Bangalore Bench of the Tribunal in the case of Tata Elxsi Ltd. (supra) where the provision considered was section 10A which is on the same lines as section 10B.

27. At this juncture, it is necessary to refer to one aspect of the matter. It may be an easy task to exclude the freight, telecom charges or insurance attributable to the delivery of computer software outside India or expenses, if any, incurred in foreign exchange in providing the technical services outside India from the export turnover and the total turnover if they are separately mentioned in the invoice raised by the assessee. In the course of the arguments addressed on behalf of M/s. Sak Soft Ltd., a question arose as to what would happen if these items are not separately shown in the invoice and are included in the total amount raised by the invoice. It was conceded on behalf of the assessee by its learned representative that in such a case, the Assessing Officer will have the power to go behind the invoice and find out how much of the invoice amount pertains to the recovery of the aforesaid items. We are also of the view that in an appropriate case it would be open to the Assessing Officer to exercise such a power in order to apply the formula in a meaningful manner.

28. Arguments were addressed by both the sides as to the advisability of incorporating the definition of 'total turnover' in sections 80HHC, 80HHE and 80HHF into the provisions of section 10B. Whereas the argument of the assessee and the interveners was that since all these provisions are of the same genre, the rules of interpretation require that the definitions in those sections be read into section 10B, the objection of the department was that the scheme of sections 10A and 10B on the one hand and that of sections 80HHC, 80HHE and 80HHF on the other was completely different and, therefore, it would be wrong to read into section 10B the definition of 'total turnover' appearing in the other sections referred to above. It seems to us that the objection of the department is not well-founded. The common thread running through all these sections is that they are all provisions granting relief to the assessees in respect of profits derived from export. Section 80HHC provides for deduction in respect of profits retained for export business, section 80HHE provides for deduction in respect of profits from the export of computer software etc., and section 80HHF provides for deduction of profits and gains from export or transfer of film software etc. These sections fall under Chapter VI-A of the Act which provides for "Deductions to be made in computing total income". Sections 10A and 10B on the other hand make special provision in respect of newly established undertakings in free-trade zone etc., and newly established hundred per cent export-oriented undertakings respectively. These are also provisions granting relief to the assessees in respect of their export profits. These two sections, however, fall under Chapter III which provides for "Incomes which do not form part of total income". The difference between Chapter III and Chapter VI-A is that while the former excludes the income in question totally from the purview of total income and gives total exemption from tax, the latter gives deduction to the assessees of a part of the profits and gains of the concerned business from the gross total income. In the former the income in question does not enter the computation at all, whereas in the latter the income is included in the gross total income and thereafter deduction is given therefrom in accordance with the provisions of the relevant section. Both, however, are chapters which give relief to the assessees from taxation subject to the conditions being fulfilled. In addition all the sections referred to above, whether under Chapter III or Chapter VI-A, provide for relief from export profits and in that sense they are of the same genre. It cannot be disputed that the object of these sections is to encourage the earning of foreign exchange and provide incentive to promote exports. If some of the sections such as section 80HHE and 80HHF provide for a formula for calculating the deduction which is identical with the formula prescribed by section 10B, it follows that it would be incongruous to interpret section 10B in a manner different from those two sections merely because there is no definition of 'total turnover' in that section. Sections 80HHE and 80HHF prescribe the formula and it is contained in sub-section (3) of these sections. The sub-section is identically worded in both sections and it is as under :

"(3) For the purposes of sub-section (1), profits derived from the business referred to in that section shall be the amount which bears to the profits of the business, the same proportion as the export turnover bears to the total turnover of the business carried on by the assessee."

'Export turnover' is defined in Explanation (c) below these sections. The definition excludes freight, telecom charges or insurance attributable to the delivery of the computer software outside India or expenses, if any, incurred in foreign exchange in providing the technical services outside India. The expression 'total turnover' is defined in Explanation (e) below section 80HHE and Explanation (j) below section 80HHF. The definition excludes the freight, telecom charges etc., and expenses incurred in foreign exchange in providing technical services outside India. Thus statutorily parity is maintained between export turnover and total turnover in these sections. We do not see why such parity cannot be maintained between export turnover and total turnover in section 10B just because "total turnover" has not been defined in that section.

29. We do not wish to burden this order by referring to a plethora of authorities cited in support of the rule of interpretation canvassed on behalf of the assessee and the intervener. However, a reference to a few of them is necessary. In Raghubans Narain Singh's case (supra) the Supreme Court observed in the penultimate paragraph of the judgment that "it is a well settled rule of construction that where the Legislature uses the same expression in the same statute at two places or more the same interpretation should be given to that expression unless the context requires otherwise". A reference to this rule of construction can be found in the judgment of the Supreme Court in Central Bank of India v. Ravindra AIR 2001 SC 3095. In this judgment the following further observations have been made :

"A more correct statement of the rule is, as held by the House of Lords in Farrell v. Alexander (1976) 2 All ER 721 'where the draftsman uses the same word or phrase in similar contexts he must be presumed to intend it in each place to bear the same meaning'. The court having accepted the invitation to embark upon interpretative expedition shall identify on its radar the contextual use of the word or expression and then determine its direction, avoiding collision with icebergs of inconsistency and repugnancy".

In Maxwell's Interpretation of Statutes (10th Edition page 522), it has been stated that "It is, at all events reasonable to presume that the same meaning is implied by the use of the same expression in every part of an Act". No doubt this presumption is a weak one and can be readily displaced, but it can be done so only by reference to the context as held by the Supreme Court in Shamrao Vishnu Parulekar v. District Magistrate, Thana AIR 1957 SC 23 at 26, 27). It is thus clear from the above authorities that the words 'total turnover' appearing in the various provisions of the Income-tax Act should be construed in the same manner unless it leads to contextual inconsistencies or repugnancy. So far as the controversy before us is concerned, the context requires that the above words be construed in such a manner as to be in harmony with the expression 'export turnover' in the sense that whatever is excluded from the export turnover should also be excluded from the total turnover, more particularly when all the provisions referred to above uniformly prescribe a formula in which the export turnover is the numerator and the total turnover is the denominator. Apart from this aspect, we should also bear in mind that sections 10A, 10B, 80HHC, 80HHE, and 80HHF are all intended to give relief to the assessees in respect of profits of the exports and provide incentive to the earning of the foreign exchange. Thus they have a uniform object to serve and this is an important contextual aspect to be considered. Further, we have the advantage of the words 'total turnover' being defined in sections 80HHC, 80HHE and 80HHF in the same manner as "export turnover" inasmuch as what has been excluded by definition from the export turnover is also excluded in the definition of the 'total turnover'. Therefore, the total turnover for the purpose of applying the formula prescribed by sub-section (4) of section 10B, though not defined, should be construed in the same manner in which the export turnover has been defined in that section, that is to say, by excluding the freight, telecom charges and insurance attributable to the delivery of goods outside India or expenses incurred in foreign exchange in providing technical services outside India.

30. The department contended that the Legislature has advisedly not defined 'total turnover' for the purpose of section 10B (and also 10A) and the omission to do so should not be supplied by a process of interpretation. What the department means is that unless there is a definition of 'total turnover' for the purpose of section 10B and it excludes the freight, telecom charges, etc., or expenses incurred in foreign exchange, merely by a process of interpretation these two items of receipts should not be excluded from the total turnover. We have already held that there is no element of turnover where the receipt represents merely the recovery or reimbursement of the expenses incurred by the assessee. Further, if there is no definition of 'total turnover' then in that case, we have to adopt the popular sense of the expression. In Taj Mahal Hotel's case (supra) it was held by the Supreme Court that :

"Now it is well-settled that where the definition of a word has not been given, it must be construed in its popular-sense if it is a word of every day use. Popular sense means 'that sense which people conversant with the subject matter with which the statute is dealing, would attribute to it'."

Even in commercial parlance which reflects the popular sense, we do not think that the word 'turnover' is understood by commercial men as including receipts by way of reimbursement of expenses. We would venture to think that in the definitions of the words 'total turnover' appearing in sections 80HHC, 80HHE and 80HHF, the popular sense of the words have been taken note of. It would be incongruous and inconsistent to discard that sense while interpreting the same words appearing in section 10B, particularly when they have not been defined in that section.

31. It was said on behalf of the department that logic cannot supply what is not supplied by law and our attention in this behalf was drawn to paragraph 13 of the order of the Special Bench in the case of Aztech Software & Technology Services Ltd. (supra ) where it was held that court cannot read words into a statutory provision which is plain and unambigu- ous and that a casus omissus should not be supplied readily by the court except in the case of clear necessity and when reason for it is found in the four corners of the statute itself. Reliance was also placed on the judgment of the Supreme Court in the case of Dharmendra Textiles Processors (supra) regarding the rule of casus omissus. We are faced with the situation where sub-section (4) of section 10B refers to 'total turnover' as part of the formula, though the same has not been defined in the section. There is thus an omission to define the words for the purpose of the section. It cannot be the contention of anybody that the words not having been defined should not be given any meaning at all obviously because the words have to be given a meaning in order to apply the formula. However, what the department contends is that while giving a meaning to the words 'total turnover', one should not omit from their scope the two items of receipts mentioned in the definition of 'export turnover' in clause (iii ) of Explanation 2 to the section. We are not sure whether the rule of casus omissus has any role to play at all. The rule has been stated thus by the Privy Council in Hansraj Gupta v. Dehra Dun Masoorie Electric Tramway Co. Ltd. AIR 1933 PC 63 at 65 : "It is an application of the same principle that matter which should have been, but has not been provided for in a statute cannot be supplied by courts, as to do so will be legislation and not construction". If this rule were to be applied to the present case, it would mean that since the words 'total turnover' have not been defined for the purpose of section 10B their meaning cannot be supplied at all, which will result in absurdity and make the formula prescribed by sub-section (4) unworkable, because if we are not to supply the meaning of 'total turnover' then we cannot also apply the formula. This will result in the whole section becoming unworkable, a consequence which cannot be countenanced at all under any circumstances. We however, understand the argument of the department to be that while interpreting the scope of the words 'total turnover' appearing in section 10B, we cannot exclude the freight, telecom charges and insurance attributable to the delivery of the goods outside India or expenses incurred in foreign exchange in providing technical services outside India. But by interpreting the words 'total turnover' as excluding these two items of receipts, we are not in any manner violating the rule of casus omissus even if it is assumed that this rule is applicable to the present case. We are only interpreting or construing these words in consonance with the object behind the section, its context and setting in the scheme of incentives given to the exporters by the various provisions of the Income-tax Act. We may add that even in the judgment of the Supreme Court in Dharmendra Textiles Processors' case (supra) on which the department has placed strong reliance, what was held was that a casus omissus cannot be supplied by the court except in the case of clear necessity and when reason for it is found in the four corners of the statute. It was also observed in this decision that a casus omissus should not be readily inferred and for that purpose all the parts of a statute or section must be construed together and every clause should be construed with reference to the context and the other clauses of the section so that the construction to be put on a particular provision "makes a consistent enactment of the whole statute". The interpretation which we have placed on the words 'total turnover', in our humble view takes due note of the other provisions in the section, such as the definition of 'export turnover' which is the numerator in the formula as also the other provisions of the statute, namely, the definition of 'total turnover' in sections 80HHC, 80HHE and 80HHF; the interpretation also takes note of the common thread or common context of these provisions namely, to provide incentive to exporters and to earn foreign exchange. The interpretation which the assessee and the interveners have canvassed before us, and accepted by us, is one which attempts to make a consistent enactment of the whole statute. The caution administered by the department that logic cannot supply what is not supplied by law is an argument which has not been accepted by the Karnataka High Court in Bharat Earth Movers Ltd.'s case (supra) while dealing with section 80HHC. The court had to interpret the words 'total turnover' and the precise question was whether sales-tax was includible therein when export turnover did not include sales-tax. After referring to the judgments of the Bombay, Calcutta, Madras and the Kerala High Courts on this point, and while agreeing with them the Karnataka High Court observed that: "While logic need not always be the basis for a taxing provision, it does not follow that a taxing provision logically made, should be interpreted illogically or asymmetrically, merely because it is a taxing statute. We, therefore, respectfully agree with the consistent and logical interpretation adopted by the Bombay and Calcutta High Courts and reject the interpretation put forth by the revenue". We may also refer to a judgment of the Delhi High Court in Lotus Trans Travels (P.) Ltd.'s case (supra). In this case also the same logic was adopted in interpreting the words 'total receipts of the business of the assessee' appearing in sub-section (3) of section 80HHD and as the denominator in the formula, it was held that they have to admit of the same construction as the "foreign exchange receipts" of the assessee in the numerator of the formula. The Delhi High Court concurred with the logic adopted by the Bombay and Calcutta High Courts in Sudarshan Chemicals Industries Ltd.'s case (supra ) and Chloride India Ltd.'s case (supra) respectively, as also the Madras High Court in Commissioner Of Income-Tax v. (1) Wheels India Ltd. [2005] 275 ITR 319 . The great Judge of the American Supreme Court, Oliver Wendel Holmes, may have said that "the life of law has not been logic but it has been experience"; however, another great American Judge, Justice Benjamin Nathan Cardozo seems not to fully agree with this. In his lectures on "The nature of the judicial process", to the students of the Yale University, he said that as a system of case law develops, there will be scope to apply the principles of logic and build on the structure of precedents in a symmetrical and logical form and to eliminate the accidental and the transitory, to firmly establish the permanent and essential principles. Logic and symmetry thus have their rightful places in the interpretative process. Otherwise it is difficult to justify Circular No. 621, dated 19-12-1991 (supra) issued by the CBDT when introducing a definition of 'total turnover' in clause (ba) of the Explanation to section 80HHC. It was explained that the definition of the term 'export turnover' in the section excludes freight and insurance attributable to transport whereas there is no definition of total turnover excluding these items ; in fact there was no definition of 'total turnover' at all. The circular in para 32.18 recognised that as a result thereof in the case of CIF transactions, the export turnover was taken at FOB value whereas the total turnover was taken at CIF value. In para 32.19 this was referred to as an anomaly and a definition of 'total turnover' was inserted to remove the same. The Board has thus adopted a logical approach and has canvassed for parity or uniformity in the ingredients of both 'export turnover' and 'total turnover'. The department however, pointed out that the Parliament could have amended section 10B also on the same lines but did not do so. We are unable to appreciate how the omission to introduce, simultaneously, a definition of 'total turnover' in section 10B can be made the basis of the argument that it should be interpreted as including the freight, telecom charges etc., and the expenses incurred in foreign exchange in providing the technical services outside India. On the contrary, there was always the possibility of the total turnover in section 10B being interpreted in the manner canvassed before us on behalf of the assessee and the interveners, consistent with the definition of those words in the other sections. It was, therefore, necessary, if the intention of the Parliament was otherwise, that there should have been a definition of the words 'total turnover' inserted in section 10B which included the receipts by way of reimbursement of the freight, telecom charges or the insurance attributable to the delivery of the goods outside India or the expenses in foreign exchange in providing technical services outside India. Since it has not been done, a consistent and uniform construction of the words, having regard to the scheme and purpose of the incentive provisions has to be given. The observations of Lord Denning in 1949 in Seaford Court Estates v. Asher [1949] 72 ALL ER 155 may be apposite here :

". . . when a defect appears a Judge cannot simply fold his hands and blame the draftsman. He must set to work on the constructive tasks of finding the intention of Parliament . . . , and he must supplement the written word so as to give 'force and life' to the intention of the Legislature. A Judge should ask himself a question how, if the makers of the Act had themselves come across this ruck in the texture of it, they would have straightened it out ? He must then do as they would have done. A Judge must not alter the material of which the Act is woven but he can and should iron out the creases."

32. The learned representative for Adventnet Development Centre (India), one of the interveners submitted that the definition of 'export turnover' in clause (iii) of Explanation 2 below section 10B was not based on the concept of "Net inflow of foreign exchange" as sought to be made out in the order of the Chennai Bench of the Tribunal in California Software Co. Ltd.'s case (supra) because the condition that the assessee should have used foreign currency is applicable only to the expenses incurred by it in providing the technical services outside India and is not applicable to the expenses incurred in freight, telecom charges or insurance attributable to the delivery of the goods outside India. We have gone through the order especially paragraphs 22.3 and 23. In para 22.3 the Tribunal has observed that the effect of the judgment of the Supreme Court in the case of K. Ravindranathan Nair (supra) is that "what is deducted from the 'export turnover' (the numerator in the formula) need not necessarily be deducted from the "total turnover" (the denominator in the formula). It appears to us, with respect, that this may not be an accurate description of the controversy before the Supreme Court because in K. Ravindranathan Nair's case (supra) the Supreme Court was concerned with the 'profits of the business' and the 'total turnover' and the argument of the assessee was that the processing charges, which was includible in the profits of the business, should be excluded from the total turnover. The relationship between 'export turnover' and 'total turnover', which are the numerator and the denominator in the formula in section 80HHC was not the subject matter of decision by the Supreme Court. In para 23 the Tribunal observed that certain expenses incurred in foreign exchange are deducted from the export turnover by definition, the object of which "apparently" was netting in relation to the foreign exchange inflow and outflow and not because such expenses were part of the export turnover. The Bench further observed that there can be no logical reason to exclude from the total turnover what was never part of it in the first instance. The concept of net inflow of foreign exchange, with respect, seems inappropriate to the definition of 'export turnover' in section 10B because, as pointed out on behalf of the intervener, this concept cannot in the very nature of things apply to freight, telecom charges and insurance attributable to the delivery of the goods outside India because these expenses were not required to be incurred in foreign exchange; the assessee could incur them in Indian currency in which case there is no question of net inflow of foreign exchange so far as these expenses are concerned. It cannot possibly be argued that the concept is limited to that part of the definition which requires the expenses to be incurred in foreign exchange. However, the observation of the Bench that there can be no logical reason to exclude from the total turnover what was never part of it in the first instance, with respect, appears to be in favour of the contention canvassed before us on behalf of the assessee and the interveners, whose contention also is that the items excluded from the export turnover should also be excluded from the total turnover because they can never be considered as part of the turnover, for they have no element of turnover in them and are mere reimbursement of the expenses.

33. The other order of the Chennai Bench of the Tribunal in which the judgment of the Supreme Court in K. Ravindranathan Nair's case (supra) has been applied is the case of I Soft R&D (P.) Ltd. (supra). In para 21 of this order it has been observed that in K. Ravindranathan Nair's case (supra), "For the first time, the Supreme Court has held that it is possible in law to disturb the composition of export turnover and at the same time without making any such corresponding change in the total turnover. It means the principle of parity does not apply in all cases in the light of the above judgment of the Supreme Court. . . ." With reference to this order also it has been pointed out by the learned representative for the intervener (Adventnet) that in K. Ravindranathan Nair's case (supra) only profits of the business and total turnover were considered and the Supreme Court was not concerned with the composition of 'export turnover' or the further question whether it can be disturbed without making any change in the total turnover. As our observations with reference to the order of the Chennai Bench in California Software Co. Ltd.'s case (supra) would show, it appears to us, with respect, that the factual controversy before the Supreme Court was not accurately depicted before the Tribunal. Towards the end of paragraph 22 it was observed by the Tribunal that the judgment of the Supreme Court in LMW's case (supra) still holds good with the distinction that after K. Ravindranathan Nair's case (supra) "The old proposition of automatic equal adjustment cannot be applied. It can be applied only depending upon the facts and circumstances of each case". The factual inaccuracy in summarizing the controversy before the Supreme Court in K. Ravindranathan Nair's case (supra) is also seen to have to been repeated in the last two sentences of this paragraph where again there is reference to exclusions from 'export turnover' in K. Ravindranathan Nair's case (supra).

34. We may now refer to some of the orders of the Tribunal on issue. We have already referred to the order of the Bangalore Bench in the case of Tata Elxsi Ltd. (supra ). In para 10 of this order it has been held as under :

"10. The term 'total turnover' no doubt is not defined in section 10A. However, the term 'total turnover' would be an enlargement of the term 'export turnover'. In other words, the sum total export turnover and domestic turnover would constitute 'total turnover'. The formula for computation of the deduction under section 10A, when restated in the above manner, would be as under :

The term 'export turnover' would then be a component or part of the denominator; the other component being the domestic turnover. In other words, to the extent of 'export turnover' there would be a commonality between the numerator and denominator of the formula. In view of the commonality, the understanding should also be the same. In other words, if the 'export turnover' in the numerator is to be arrived at after excluding certain expenses, the same should also be excluded in computing the 'total turnover' in the denominator. Though there is no definition of the term 'total turnover' in section 10A, there is also nothing in the said section to mandate that what is excluded from the numerator (export turnover) would nevertheless form part of the denominator. One would have to apply consistent standards in understanding and applying a term, particularly when, such term, viz., export turnover has an independent function and at the same time a part of a larger term viz., total turnover. Thus, if some expenses, for any reason are excluded in arriving at the 'export turnover' the same should be reduced from 'total turnover' also."

This order is with reference to section 10A but again as already noticed the provisions of sections 10A and 10B are identical on all material aspects. More particularly, both the sections define only the 'export turnover' but not 'total turnover'; further sub-section (4) of both the sections prescribe an identical formula for computing the export profits, in which the export turnover is the numerator and the total turnover is the denominator. We are in respectful agreement with the view expressed by the Bangalore Bench in the above order.

35. In California Software Co. Ltd.'s case (supra), the Chennai Bench of the Tribunal, as already noticed, has held that the objective of the definition of 'export turnover' in section 10B was to apply the principle of netting by comparing the inflow and outflow of foreign exchange from or into the country. We have already held that this could not have been the objective. The order of the Chennai Bench, to the extent it holds so, with respect, cannot be approved. However, in the same paragraph (para 23) the Bench has also held that what was never part of the turnover in the first instance cannot be excluded therefrom. We have already held that impliedly at least the Bench seems to have held that the receipts by way of freight, telecom charges or insurance attributable to the delivery of the computer software outside India or expenses incurred in foreign exchange in connection with the provision of the technical services outside India cannot be included in the total turnover. We have also, inter alia, adopted a similar line of reasoning in the sense that mere reimbursement or recovery of such expenses can in no sense be considered to have an element of turnover. To the extent our view accords with the view taken by the Chennai Bench in paragraph 23 of its order, the same is approved.

36. We may now refer to another order of Chennai Bench in I Soft R&D (P.) Ltd.'s case (supra). We have already expressed our view vis-á-vis this order and the manner in which the judgment of the Supreme Court in K. Ravindranathan Nair's case (supra) was understood therein. With respect, it appears to us that the Bench was of the view that in K. Ravindranathan Nair's case (supra) the comparison was between the export turnover and the total turnover for the purpose of section 10A, whereas actually the comparison was between the profits of the business and the total turnover. It seems to us, again with respect, that this inaccurate appreciation of the controversy in K. Ravindranathan Nair's case (supra) might have led the Bench to hold that the principle of parity has been discarded by the Supreme Court. We have, elsewhere in this order, endeavoured to show that the question of applying the principle of parity could not have arisen in K. Ravindranathan Nair's case (supra) before the Supreme Court, because the assessee himself did not adhere to the same by arguing that the processing charges should be included in the profits of the business, but should be excluded from the total turnover. The Supreme Court applied the statutory definition of the profits of the business in clause (ba) of the Explanation below section 80HHC and rejected the assessee's argument. This aspect has been already dealt with by us in the earlier part of our order and therefore there is no need to repeat the same here again. Suffice to say that where a statutory definition exists, it is not possible to apply the rule of parity, ignoring the definition.

37. In the case of S.R.A. Systems Ltd. (supra), the Chennai Bench of the Tribunal was dealing with section 10A of the Act. A perusal of the order shows that the Bench applied the basis of section 80HHE, which also gave incentives for exports and which contained a definition of both 'export turnover' and 'total turnover'. The Bench observed that what was excluded from the export turnover was also excluded from the total turnover and since "section 10A was akin to section 80HHE, hence the deduction can be properly computed only by deducting expenditure incurred in foreign exchange both from the total turnover and also from the export turnover" (para 8 at page 3 of the order). We have also adopted inter alia, a similar line of reasoning and have taken sustenance for our view from the definition of 'total turnover' in section 80HHE. We may add that we have also referred to section 80HHF which contains a similar definition of 'total turnover'.

38. The parties have compiled several orders of the Chennai and Bangalore Benches of the Tribunal in which it has been held that whatever is excluded from the export turnover should also be excluded from the total turnover for the purposes of section 10A or 10B of the Act. We are generally in agreement with the conclusion reached in these orders, which are not being dealt with individually.

39. For the above reasons, we hold that for the purpose of applying the formula under sub-section (4) of section 10B, the freight, telecom charges or insurance attributable to the delivery of articles or things or computer software outside India or the expenses, if any, incurred in foreign exchange in providing the technical services outside India are to be excluded both from the export turnover and from the total turnover, which are the numerator and the denominator respectively in the formula. The appeals filed by the department are thus dismissed. We make it clear that we have not decided the cases of the interveners and they will be decided by the respective Benches in conformity with our decision.

40. Before parting with the appeals, we wish to mention that this reference to the Special Bench was argued with great ability and assiduity by both the sides and we wish to place on record our appreciation for the same.

41. In the result, the appeals are dismissed with no order as to costs.